• Govt won’t pick winners in refining industry __ Lokpobiri
• Backs long-term crude contracts, seeks transparent, predictable regulation

Federal government has declared that it is implementing policies that drive fundamental shift in Nigeria’s petroleum industry from crude export dependence to an integrated resource value chain that captures greater value from domestic production.

Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, who spoke in Lagos on Monday pointed at the nation’s expanding downstream petroleum industry activities, warning that expanding refining capacity would deliver little without reliable crude supply, commercially viable transactions and a predictable investment environment.

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Lokpobiri whose presentation was delivered at the Nigeria Oil Refining Summit (NORS 2026), said Nigeria could no longer treat crude production, refining and petroleum-product consumption as separate segments of the industry. He said the competitiveness and sustainability of the petroleum sector would depend on aligning crude production, refining capacity, market demand, infrastructure, investment and access to markets within a single value chain.

He said the strategic objective was to move Nigeria progressively from an economy that primarily exports crude oil to one that captures increasing value through domestic refining, petrochemicals and related industrial activities. The goal, he stressed, was not simply to produce more crude or build more refineries independently, but to establish an integrated system in which upstream supply and downstream demand operate on commercially sustainable terms.

The minister pointed to the Petroleum Industry Act (PIA) 2021 as the legal foundation for the transformation, but said the priority now was to convert the statutory framework into predictable implementation, commercially viable transactions and measurable results. He identified securing reliable crude feedstock, balancing the commercial interests of upstream producers and downstream refiners, and de-risking investment through a transparent, predictable and bankable regulatory environment as the core pillars of the Federal Government’s approach.

On refinery feedstock, Lokpobiri was emphatic that “a refinery cannot operate without crude”, arguing that discussions about the future of domestic refining must address not only the availability of crude but also the reliability and commercial viability of supply. He said government’s position was that Nigerian crude production should increasingly support domestic value addition while retaining the commercial incentives required to attract investment in exploration, development and production.

He defended the Domestic Crude Supply Obligation (DCSO) framework established under Section 109 of the PIA as an important instrument for strengthening the connection between the upstream and downstream sectors, stressing that it should not be reduced to an administrative allocation mechanism. According to him, the framework must evolve into a reliable, transparent and commercially bankable crude-supply system capable of sustaining domestic refineries.

The minister also highlighted the Naira-for-Crude initiative as a key government intervention designed to deepen the linkage between domestic crude production and refining. He said the policy was intended to facilitate the supply of Nigerian crude to domestic refineries in local currency, reduce foreign-exchange pressures associated with crude procurement and provide refiners with greater supply predictability. More broadly, he said where Nigeria has the crude, refining capacity and market, the country should increasingly create conditions for the resulting value to be captured domestically.

But Lokpobiri cautioned against treating crude producers and domestic refiners as opposing sides of the same transaction. He said upstream investors needed commercially viable returns to justify exploration, development, production and infrastructure spending, while refiners required dependable crude at sustainable prices to operate continuously and compete in the domestic market.

He therefore urged stakeholders to pursue alignment rather than confrontation. The PIA’s willing-buyer, willing-seller principle, he said, remained fundamental to domestic crude transactions, while the DCSO provided the regulatory mechanism for incorporating national energy-security objectives into the market. The challenge was to ensure that crude which is theoretically available could actually be delivered to refineries commercially, without imposing obligations that could undermine upstream investment.

Against this backdrop, the Federal Government will continue to encourage transparent, long-term and bankable arrangements between crude producers and domestic refiners, Lokpobiri said. Such arrangements should provide refiners with greater certainty of supply while preserving appropriate commercial incentives for producers, with the success of one part of the petroleum value chain reinforcing rather than weakening another.

Investment, he said, was equally critical to the success of Nigeria’s refining ambitions. Whether a project is a modular refinery, a mid-sized plant, a mega-refinery or an integrated refinery and petrochemical complex, investors and lenders need confidence about the rules, feedstock availability, product markets, capital repatriation, approval timelines, contract enforcement and dispute resolution.

Lokpobiri said Nigeria’s regulatory system must therefore compete not only for capital but also for investor confidence, noting that investors would compare the country with competing jurisdictions in Africa and around the world. The post-PIA regulatory architecture, he said, was designed to provide greater certainty, transparency and predictability, with regulators expected to clearly define applicable rules and process approvals within established timelines while avoiding unnecessary intervention in commercial outcomes.

He further called for deeper participation by development finance institutions, export credit agencies, regional financial institutions, international banks, institutional investors and private capital providers in the refining and petrochemical value chain. He identified the Africa Energy Bank as a new opportunity for mobilising African capital for energy security and infrastructure, while stressing that financing should extend beyond individual refinery projects to the wider infrastructure needed to make the refining ecosystem viable, including crude transportation and evacuation, storage, terminals, pipelines, power, logistics and product distribution.

Setting out what he described as the Federal Government’s refining policy position, Lokpobiri said government would continue strengthening the DCSO framework and mechanisms for reliable and commercially sustainable crude supply to domestic refineries. It would also promote arrangements that balance the legitimate interests of upstream producers and downstream refiners, while pursuing regulation founded on transparency, predictability, competition and bankability.

He said government would equally continue to mobilise domestic, regional and international capital into refining and petrochemicals and work with regulators, producers, refiners, investors and financiers to remove practical bottlenecks across the petroleum value chain. Crucially, he stressed that government’s role was to provide a “level, transparent and predictable playing field—not to predetermine commercial winners.”

Lokpobiri also framed domestic refining as more than an industrial-policy ambition, describing it as a national energy-security priority. Nigeria, he said, must capture more value from every barrel produced in the country, while ensuring that refiners can operate sustainably, upstream investments remain commercially viable and consumers benefit from a more secure and efficient petroleum-products market.

He urged industry stakeholders to move beyond discussions of challenges towards practical solutions capable of implementation, insisting that Nigeria must build a refining industry that can reliably supply the domestic market, a petroleum market capable of attracting and retaining capital, and an energy system that supports industrialisation, economic growth and long-term energy security.

In a closing call that captured the thrust of his message to the NORS delegates, Lokpobiri said Nigeria must move “from crude abundance to refining capacity; from refining capacity to industrial value creation; and from policy intent to measurable delivery.